Download Fronting Programs: Benefits and Considerations

Potential Benefits
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Enhanced control over the insurance program structure
Ability to address risks not covered by traditional insurance or financial products
Opportunity to benefit from positive loss experience
Reduction of total cost of risk
Supports programs to provide proof of insurance
Customized policy forms
Reduced volatility of rate, capacity, and coverage
Allows deductible flexibility (e.g., by location or by line)
Optimization of risk retention strategies
Tax efficiencies
Interest earned on premiums
Interest earned on reserves and capitalization funds
Control over capital management and investments
Facilitates cost-efficient access to reinsurance market
Provides the benefit of captive ownership with reduced set-up costs and capital contribution
Cost effective alternative to captive ownership
Facilitates access to risk transfer only available at higher attachment points
Use of manuscript forms to custom tailor coverage
Indemnity Program
incorporate varying levels of risk retention and/or risk transfer
Rent-A-Captive
Fronting Programs
Captive
Fronting Programs: Benefits and Considerations
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Potential Considerations
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Direct impact of negative claims experience
Start-up costs
Operating and management costs
Collateral requirements
Capitalization requirements
Lack of control over investments
Regulatory oversight
Program structure limitations
Time frame for program implementation
Current interest rates and maturity of losses will impact estimated cost/benefit
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AIG Advantages
• Over 50 years of providing fronting solutions leveraging AIG’s network of owned operations in over 90 countries,
supported wherever required by local insurance partners
• A market leader providing non-traditional insurance and reinsurance solutions
• Unique deal team culture bringing together underwriters, actuaries, lawyers, accountants, credit officers, claims
professionals and operational specialists
• Technical expertise to cover risks for which there is no conventional insurance market
• A history of partnering with clients to truly understand their business needs to provide innovative risk transfer
and risk financing solutions
• Superior servicing and claims handling, reporting, and management
• Full access to AIG’s multinational policy issuance capabilities and expertise controlling multi-currency cash flows
• Access to the resources of the AIG organization, including significant risk-bearing and risk financing capacity
• Ability to insure virtually all lines of business
• Extensive product customization ability
• Regional fronting expertise and ability to meet local regulatory requirements
• Full range of captive management and protected cell services
Visit us today at www.aig.com/frontingandcaptiveservices
Contacts:
The Americas
Europe, Middle East, and Africa
US Fronting
Robert Gagliardi
1.802.419.1234 • [email protected]
Salil Bhalla
44.207.954.8492 • [email protected]
Multinational Fronting
Brian McNamara
1.441.298.5229 • [email protected]
Ben Vale
61.3.9522.4010 • [email protected]
Asia Pacific
Captive Management – Global
Robert Gagliardi
1.802.419.1234 • [email protected]
American International Group, Inc. (AIG) is a leading global insurance organization. Founded in
1919, today we provide a wide range of property casualty insurance, life insurance, retirement
products, mortgage insurance and other financial services to serving customers in more than 100
countries and jurisdictions. Our diverse offerings include products and services that help businesses
and individuals protect their assets, manage risks and provide for retirement security. AIG companies
serve commercial, institutional, and individual customers through one of the most extensive worldwide
property-casualty networks of any insurer. In addition, AIG companies are leading providers of life
insurance and retirement services in the United States. AIG common stock is listed on the New York
Stock Exchange and the Tokyo Stock Exchange.
Additional information about AIG can be found at www.aig.com and www.aig.com/strategyupdate |
YouTube: www.youtube.com/aig | Twitter: @AIGinsurance | LinkedIn: www.linkedin.com/company/
aig. These references with additional information about AIG have been provided as a convenience,
and the information contained on such websites is not incorporated by reference into this material.
© American International Group, Inc. All rights reserved.
08/2016
Disclosure: AIG is the marketing name for the
worldwide property-casualty, life and retirement,
and general insurance operations of American
International Group, Inc. For additional
information, please visit our website at www.
aig.com. All products and services are written
or provided by subsidiaries or affiliates of
American International Group, Inc. Products or
services may not be available in all countries,
and coverage is subject to actual policy
language. Non-insurance products and
services may be provided by independent third
parties. Certain property-casualty coverages
may be provided by a surplus lines insurer.
Surplus lines insurers do not generally
participate in state guaranty funds, and
insureds are therefore not protected by such
funds. Insurance coverage is account specific
and is governed by actual policy language. This
presentation does not constitute an offer to sell
any of the insurance coverage or other products
or services described herein. We do not provide
legal, credit, tax, accounting or other
professional advice, and you and your advisors
should perform your own independent review
with respect to such matters as they relate to
your particular circumstances and reach your
own independent conclusions regarding the
benefits and risks of any proposed transaction
or business relationship.